One part of the tax compromise I kind of like is the payroll tax holiday part. Low-income workers may not pay income tax, but FICA taxes still take a big hit on their paychecks.

The “holiday” is a 2 percent reduction for one year, for employees only. Employers still pay the amount they owe now. It’s not exactly a windfall, but for very low-income workers every little bit helps.

Right now a lot of allegedly liberal bloggers are bashing the payroll tax holiday and saying that another tax credit, such as the “Making Work Pay” income tax credit of $400 per person in effect for 2009 and 2010 (alas, no more), was the way to go. Several bloggers have linked to an article at the Center on Budget and Policy Priorities that makes this argument.

However, the article is a year old and describes a different tax holiday proposal than the one in the compromise bill. The “holiday” described in the article is one Republicans suggested a while back that would have suspended payroll taxes entirely for a short time, for employers as well as employees. Most of the specific arguments in the article against a payroll tax holiday do not apply to the “holiday” plan we’re actually dealing with at the moment.

Rather than extending the administration’s Making Work Pay tax credit for two years, which would’ve been worth about $60 billion a year, they’ve agreed to a one-year cut in the payroll taxes paid by employees, which’ll raise $120 billion in 2011. That’s a much stronger boost over the next year, and of course these tax cuts have a tendency to get extended.

And I’d add that FICA taxes are a bigger burden to low-wage workers than income taxes. As Republicans never stop reminding us, a lot of lucky duckies out there pay no income tax because they don’t earn enough to be taxed. But FICA taxes get taken out of everyone’s paycheck.

The Earned Income Tax Credit and the Child Tax Credit enacted under the Making Work Pay tax credit bill were set to expire this year, also but are now extended. These credits make a big difference to the very poor.

Among the sites working overtime to bash the tax agreement is, of course, Firedoglake, and the most over-the-top criticism of the bill I saw there is by Nancy Altman, who has decided the compromise is an Obama Administration plot to destroy Social Security.

After linking to the year-old and mostly irrelevant Center on Budget and Policy Priorities article, she declares that if the “holiday” becomes permanent Social Security will be way underfunded, and Congress would be pressured to slash away at benefits promised to younger workers. And yes, that could happen.

It’s not clear to me if Altman understands that employers’ contributions to Social Security are not being cut, which would impact her calculations, but she’s assuming the Congress elected in 2012 will be even more conservative than the one we’ll get for the next two years. Frankly, if that’s the case, losing Social Security will be among the least of our economic problems. (Buy your Guernsey now, before the price goes up.)

There’s a lot about the compromise to criticize, certainly. Extending all of the Bush tax cuts is ruinous to our long-term economic health, and the more-conservative Congress Altman assumes will probably extend them yet again. Also, Paul Krugman argues that because the payroll tax holiday and unemployment extension are for only one year, the economy is likely to be stalled again in 2012 when President Obama is running for re-election.

Today some economists are arguing that the tax compromise amounts to a “back-door stimulus” that really should give the economy a boost in 2011, and given the makeup of the next Congress this may be about the only way a stimulus bill can be enacted. If the choice is this bill or nothing, the economy is better off with this bill.

It appears the Obama Administration (and the rest of us) will continue to be haunted by his failure to get a bigger stimulus package early in his administration, when he had the political capital and the majorities in both houses to make that possible. Yes, massive screwup on Obama’s part. But what’s done is done.